Real Estate Glossary

acceleration clause
A
provision in a mortgage that gives the lender the right to demand
payment of the entire principal balance if a monthly payment is missed.

acceptance
An offeree’s consent to enter into a contract and be bound by the terms of the offer.

additional principal payment
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.

adjustable-rate mortgage (ARM)
A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index.

adjusted basis
The
original cost of a property plus the value of any capital expenditures
for improvements to the property minus any depreciation taken.

adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

adjustment period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

administrator
A person appointed by a probate court to administer the estate of a person who died intestate.

affordability analysis
A
detailed analysis of your ability to afford the purchase of a home. An
affordability analysis takes into consideration your income,
liabilities, and available funds, along with the type of mortgage you
plan to use, the area where you want to purchase a home, and the
closing costs that you might expect to pay.

amenity
A
feature of real property that enhances its attractiveness and increases
the occupant’s or user’s satisfaction although the feature is not
essential to the property’s use. Natural amenities include a pleasant
or desirable location near water, scenic views of the surrounding area,
etc. Human-made amenities include swimming pools, tennis courts,
community buildings, and other recreational facilities.

amortization
The gradual repayment of a mortgage loan by installments.

amortization schedule
A
timetable for payment of a mortgage loan. An amortization schedule
shows the amount of each payment applied to interest and principal and
shows the remaining balance after each payment is made.

amortization term
The
amount of time required to amortize the mortgage loan. The amortization
term is expressed as a number of months. For example, for a 30-year
fixed-rate mortgage, the amortization term is 360 months.

amortize
To repay a mortgage with regular payments that cover both principal and interest.

annual mortgagor statement
A
report sent to the mortgagor each year. The report shows how much was
paid in taxes and interest during the year, as well as the remaining
mortgage loan balance at the end of the year.

annual percentage rate (APR)
The
cost of a mortgage stated as a yearly rate; includes such items as
interest, mortgage insurance, and loan origination fee (points).

annuity
An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis.

application
A
form used to apply for a mortgage loan and to record pertinent
information concerning a prospective mortgagor and the proposed
security.

appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.

appraised value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.

appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property.

appreciation
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

assessed value
The valuation placed on property by a public tax assessor for purposes of taxation.

assessment
The
process of placing a value on property for the strict purpose of
taxation. May also refer to a levy against property for a special
purpose, such as a sewer assessment.

assessment rolls
The public record of taxable property.

assessor
A public official who establishes the value of a property for taxation purposes.

asset
Anything
of monetary value that is owned by a person. Assets include real
property, personal property, and enforceable claims against others
(including bank accounts, stocks, mutual funds, and so on).

assignment
The transfer of a mortgage from one person to another.

assumable mortgage
A mortgage that can be taken over ("assumed") by the buyer when a home is sold.

assumption
The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage.

assumption clause
A
provision in an assumable mortgage that allows a buyer to assume
responsibility for the mortgage from the seller. The loan does not need
to be paid in full by the original borrower upon sale or transfer of
the property.

assumption fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

balance sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.

balloon mortgage
A
mortgage that has level monthly payments that will amortize it over a
stated term but that provides for a lump sum payment to be due at the
end of an earlier specified term.

balloon payment
The final lump sum payment that is made at the maturity date of a balloon mortgage.

bankrupt
A
person, firm, or corporation that, through a court proceeding, is
relieved from the payment of all debts after the surrender of all
assets to a court-appointed trustee.

bankruptcy
A
proceeding in a federal court in which a debtor who owes more than his
or her assets can relieve the debts by transferring his or her assets
to a trustee.

before-tax income
Income before taxes are deducted.

beneficiary
The person designated to receive the income from a trust, estate, or a deed of trust.

bequeath
To transfer personal property through a will.

betterment
An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.

bill of sale
A written document that transfers title to personal property.

biweekly payment mortgage
A
mortgage that requires payments to reduce the debt every two weeks
(instead of the standard monthly payment schedule). The 26 (or possibly
27) biweekly payments are each equal to one-half of the monthly payment
that would be required if the loan were a standard 30-year fixed-rate
mortgage, and they are usually drafted from the borrower’s bank
account. The result for the borrower is a substantial savings in
interest.

blanket insurance policy
A single policy that covers more than one piece of property (or more than one person).

blanket mortgage
The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.

bona fide
In good faith, without fraud.

bond
An
interest-bearing certificate of debt with a maturity date. An
obligation of a government or business corporation. A real estate bond
is a written obligation usually secured by a mortgage or a deed of
trust.

breach
A violation of any legal obligation.

bridge loan
A
form of second trust that is collateralized by the borrower's present
home (which is usually for sale) in a manner that allows the proceeds
to be used for closing on a new house before the present home is sold.
Also known as "swing loan."

broker
A person
who, for a commission or a fee, brings parties together and assists in
negotiating contracts between them. See mortgage broker.

budget
A
detailed plan of income and expenses expected over a certain period of
time. A budget can provide guidelines for managing future investments
and expenses.

budget category
A category of
income or expense data that you can use in a budget. You can also
define your own budget categories and add them to some or all of the
budgets you create. "Rent" is an example of an expense category.
"Salary" is a typical income category.

building code
Local
regulations that control design, construction, and materials used in
construction. Building codes are based on safety and health standards.

call option
A
provision in the mortgage that gives the mortgagee the right to call
the mortgage due and payable at the end of a specified period for
whatever reason.

capital
(1) Money used to
create income, either as an investment in a business or an income
property. (2) The money or property comprising the wealth owned or used
by a person or business enterprise. (3) The accumulated wealth of a
person or business. (4) The net worth of a business represented by the
amount by which its assets exceed liabilities.

capital expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.

capital improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

cash-out refinance
A
refinance transaction in which the amount of money received from the
new loan exceeds the total of the money needed to repay the existing
first mortgage, closing costs, points, and the amount required to
satisfy any outstanding subordinate mortgage liens. In other words, a
refinance transaction in which the borrower receives additional cash
that can be used for any purpose.

certificate of title
A
statement provided by an abstract company, title company, or attorney
stating that the title to real estate is legally held by the current
owner.

chain of title
The history of all of
the documents that transfer title to a parcel of real property,
starting with the earliest existing document and ending with the most
recent.

clear title
A title that is free of liens or legal questions as to ownership of the property.

closing
A
meeting at which a sale of a property is finalized by the buyer signing
the mortgage documents and paying closing costs. Also called
"settlement."

closing cost item
A fee or
amount that a home buyer must pay at closing for a single service, tax,
or product. Closing costs are made up of individual closing cost items
such as origination fees and attorney's fees. Many closing cost items
are included as numbered items on the HUD-1 statement.

closing costs
Expenses
(over and above the price of the property) incurred by buyers and
sellers in transferring ownership of a property. Closing costs normally
include an origination fee, an attorney's fee, taxes, an amount placed
in escrow, and charges for obtaining title insurance and a survey.
Closing costs percentage will vary according to the area of the
country; lenders or realtors® often provide estimates of closing costs
to prospective homebuyers.

closing statement
An accounting of disbursment of funds related to a Real Estate transaction.

cloud on title
Any
conditions revealed by a title search that adversely affect the title
to real estate. Usually clouds on title cannot be removed except by a
quitclaim deed, release, or court action.

collateral
An
asset (such as a car or a home) that guarantees the repayment of a
loan. The borrower risks losing the asset if the loan is not repaid
according to the terms of the loan contract.

collection
The
efforts used to bring a delinquent mortgage current and to file the
necessary notices to proceed with foreclosure when necessary.

co-maker
A
person who signs a promissory note along with the borrower. A
co-maker's signature guarantees that the loan will be repaid, because
the borrower and the co-maker are equally responsible for the
repayment. See endorser.

commission
The fee
charged by a broker or agent for negotiating a real estate or loan
transaction. A commission is generally a percentage of the price of the
property or loan.

commitment letter
A
formal offer by a lender stating the terms under which it agrees to
lend money to a home buyer. Also known as a "loan commitment" or
pre-approved mortgage loan.

common area assessments
Levies
against individual unit owners in a condominium or planned unit
development (PUD) project for additional capital to defray homeowners'
association costs and expenses and to repair, replace, maintain,
improve, or operate the common areas of the project.

common areas
Those
portions of a building, land, and amenities owned (or managed) by a
planned unit development (PUD) or condominium project's homeowners'
association (or a cooperative project's cooperative corporation) that
are used by all of the unit owners, who share in the common expenses of
their operation and maintenance. Common areas include swimming pools,
tennis courts, and other recreational facilities, as well as common
corridors of buildings, parking areas, means of ingress and egress,
etc.

common law
An unwritten body of law based on general custom in England.

community property
A
form of ownership under which property acquired during a marriage is
presumed to be owned jointly unless acquired as separate property of
either spouse.

comparables
An abbreviation
for "comparable properties"; used for comparative purposes in the
appraisal process. Comparables are properties like the property under
consideration; they have reasonably the same size, location, and
amenities and have recently been sold. Comparables help the appraiser
determine the approximate fair market value of the subject property.

compound interest
Interest paid on the original principal balance and on the accrued and unpaid interest.

condemnation
The
determination that a building is not fit for use or is dangerous and
must be destroyed; the taking of private property for a public purpose
through an exercise of the right of eminent domain.

condominium
A
real estate project in which each unit owner has title to a unit in a
building, an undivided interest in the common areas of the project, and
sometimes the exclusive use of certain limited common areas.

condominium conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

condominium hotel
A
condominium project that has rental or registration desks, short-term
occupancy, food and telephone services, and daily cleaning services and
that is operated as a commercial hotel even though the units are
individually owned.

construction loan
A
short-term, interim loan for financing the cost of construction. The
lender makes payments to the builder at periodic intervals as the work
progresses.

consumer reporting agency (or bureau)
An
organization that prepares reports that are used by lenders to
determine a potential borrower's credit history. The agency obtains
data for these reports from a credit repository as well as from other
sources.

contingency
A condition that must
be met before a contract is legally binding. For example, home
purchasers often include a contingency that specifies that the contract
is not binding until the purchaser obtains a satisfactory home
inspection report from a qualified home inspector.

contract
An oral or written agreement to do or not to do a certain thing.

conventional mortgage
A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage.

convertibility clause
A
provision in some adjustable-rate mortgages (ARMs) that allows the
borrower to change the ARM to a fixed-rate mortgage at specified
timeframes after loan origination.

convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.

cooperative (co-op)
A
type of multiple ownership in which the residents of a multiunit
housing complex own shares in the cooperative corporation that owns the
property, giving each resident the right to occupy a specific apartment
or unit.

cooperative corporation
A business
trust entity that holds title to a cooperative project and grants
occupancy rights to particular apartments or units to shareholders
through proprietary leases or similar arrangements.

cooperative mortgages
Mortgages
related to a cooperative project. This usually refers to the
multifamily mortgage covering the entire project but occasionally
describes the share loans on the individual units.

cooperative project
A
residential or mixed-use building wherein a corporation or trust holds
title to the property and sells shares of stock representing the value
of a single apartment unit to individuals who, in turn, receive a
proprietary lease as evidence of title.

corporate relocation
Arrangements
under which an employer moves an employee to another area as part of
the employer's normal course of business or under which it transfers a
substantial part or all of its operations and employees to another area
because it is relocating its headquarters or expanding its office
capacity.

covenant
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.

credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

credit history
A
record of an individual's open and fully repaid debts. A credit history
helps a lender to determine whether a potential borrower has a history
of repaying debts in a timely manner.

credit life insurance
A
type of insurance often bought by mortgagors because it will pay off
the mortgage debt if the mortgagor dies while the policy is in force.

creditor
A person to whom money is owed.

credit report
A
report of an individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's
creditworthiness. See merged credit report.

credit bureauAn
organization that gathers, records, updates, and stores financial and
public records information about the payment records of individuals who
are being considered for credit.

debt
An amount owed to another. See installmentloan and revolving liability.

deed
The legal document conveying title to a property.

deed of trust
The document used in some jurisdictions instead of a mortgage; title is conveyed to a trustee.

default
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.

delinquency
Failure to make mortgage payments when mortgage payments are due.

deposit
A
sum of money given to bind the sale of real estate, or a sum of money
given to ensure payment or an advance of funds in the processing of a
loan. See earnest money deposit.

depreciation
A decline in the value of property; the opposite of appreciation.

discount points
See point.

down payment
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

due-on-sale provision
A
provision in a mortgage that allows the lender to demand repayment in
full if the borrower sells the property that serves as security for the
mortgage.

due-on-transfer provision
This terminology is usually used for second mortgages. See due-on-sale provision.

earnest money deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.

easement
A right of way giving persons other than the owner access to or over a property.

effective age
An
appraiser’s estimate of the physical condition of a building. The
actual age of a building may be shorter or longer than its effective
age.

effective gross income
Normal annual
income including overtime that is regular or guaranteed. The income may
be from more than one source. Salary is generally the principal source,
but other income may qualify if it is significant and stable.

expropriation

The right of a government to take private property for public use upon payment of its fair market value.

encroachment
An improvement that intrudes illegally on another’s property.

encumbrance
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

endorser
A person who signs ownership interest over to another party. Contrast with co-maker.

equity
A
homeowner's financial interest in a property. Equity is the difference
between the fair market value of the property and the amount still owed
on its mortgage.

expenses.

escrow collections
Funds
collected by the servicer and set aside in an escrow account to pay the
borrower’s property taxes, mortgage insurance, and hazard insurance.

estate
The
ownership interest of an individual in real property. The sum total of
all the real property and personal property owned by an individual at
time of death.

eviction
The lawful expulsion of an occupant from real property.

examination of title
The report on the title of a property from the public records or an abstract of the title.

exclusive listing
A
written contract that gives a licensed real estate agent the exclusive
right to sell a property for a specified time, but reserving the
owner’s right to sell the property alone without the payment of a
commission.

executor
A person named in a
will to administer an estate. The court will appoint an administrator
if no executor is named. "Executrix" is the feminine form.

Fair Credit Reporting Act
A
consumer protection law that regulates the disclosure of consumer
credit reports by consumer/credit reporting agencies and establishes
procedures for correcting mistakes on one's credit record.

fair market value
The
highest price that a buyer, willing but not compelled to buy, would
pay, and the lowest a seller, willing but not compelled to sell, would
accept.

fee simple
The greatest possible interest a person can have in real estate.

fee simple estate
An
unconditional, unlimited estate of inheritance that represents the
greatest estate and most extensive interest in land that can be
enjoyed. It is of perpetual duration. When the real estate is in a
condominium project, the unit owner is the exclusive owner only of the
air space within his or her portion of the building (the unit) and is
an owner in common with respect to the land and other common portions
of the property.

CMHC coinsured mortgage
A
mortgage for which the Federal Government and the originating lender
share the risk of loss in the event of the mortgagor's default.

Bonus

A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

first mortgage
A mortgage that is the primary lien against a property.

fixed installment
The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

fixed-rate mortgage (FRM)
A mortgage in which the interest rate does not change during the entire term of the loan.

fixture
Personal property that becomes real property when attached in a permanent manner to real estate.

flood insurance
Insurance
that compensates for physical property damage resulting from flooding.
It is required for properties located in federally designated flood
areas.

foreclosure
The legal process by
which a borrower in default under a mortgage is deprived of his or her
interest in the mortgaged property. This usually involves a forced sale
of the property at public auction with the proceeds of the sale being
applied to the mrotgage debt.

forfeiture
The loss of money, property, rights, or privileges due to a breach of legal obligation.

fully amortized ARM
An
adjustable-rate mortgage (ARM) with a monthly payment that is
sufficient to amortize the remaining balance, at the interest accrual
rate, over the amortization term.

grantee
The person to whom an interest in real property is conveyed.

grantor
The person conveying an interest in real property.

ground rent
The
amount of money that is paid for the use of land when title to a
property is held as a leasehold estate rather than as a fee simple
estate.

group home
A single-family
residential structure designed or adapted for occupancy by unrelated
developmentally disabled persons. The structure provides long-term
housing and support services that are residential in nature.

guarantee mortgage
A mortgage that is guaranteed by a third party.

guaranteed loan
Also known as a CMHC mortgage.

hazard insurance
Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.

Reverse Mortgage

A
special type of mortgage that enables older home owners to convert the
equity they have in their homes into cash, using a variety of payment
options to address their specific financial needs. Unlike traditional
home equity loans, a borrower does not qualify on the basis of income
but on the value of his or her home. In addition, the loan does not
have to be repaid until the borrower no longer occupies the property.
Sometimes called a reverse mortgage.

home equity line of credit
A
mortgage loan, which is usually in a subordinate position, that allows
the borrower to obtain multiple advances of the loan proceeds at his or
her own discretion, up to an amount that represents a specified
percentage of the borrower's equity in a property.

home inspection
A
thorough inspection that evaluates the structural and mechanical
condition of a property. A satisfactory home inspection is often
included as a contingency by the purchaser. Contrast with appraisal.

homeowners' association
A
nonprofit association that manages the common areas of a planned unit
development (PUD) or condominium project. In a condominium project, it
has no ownership interest in the common elements. In a PUD project, it
holds title to the common elements.

homeowner's insurance
An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

home warranty

A
type of insurance that covers repairs to specified parts of a house for
a specific period of time. It is provided by the builder or property
seller as a condition of the sale.

home improvement mortgage loan
A
mortgage that enables eligible borrowers to obtain financing to
remodel, repair, and upgrade their existing homes or homes that they
are purchasing. The financing takes the form of a conventional second
mortgage or a Federal Housing Administration (FHA) Section 203(k) first
mortgage.

income property
Real estate developed orimproved to produce income.

inflation
An
increase in the amount of money or credit available in relation to the
amount of goods or services available, which causes an increase in the
general price level of goods and services. Over time, inflation reduces
the purchasing power of a dollar, making it worth less.

variable interest rate
The
original interest rate of the mortgage at the time of closing. This
rate changes for an adjustable-rate mortgage (ARM). Sometimes known as
"start rate" or "teaser."

installment
The regular periodic payment that a borrower agrees to make to a lender.

installment loan
Borrowed
money that is repaid in equal payments, known as installments. A
furniture loan is often paid for as an installment loan.

insurable title
A property title that a title insurance company agrees to insure against defects and disputes.

insurance
A
contract that provides compensation for specific losses in exchange for
a periodic payment. An individual contract is known as an insurance
policy, and the periodic payment is known as an insurance premium.

insurance binder
A
document that states that insurance is temporarily in effect. Because
the coverage will expire by a specified date, a permanent policy must
be obtained before the expiration date.

insured mortgage
A
mortgage that is protected by the Federal Housing Administration (FHA)
or by private mortgage insurance (MI). If the borrower defaults on the
loan, the insurer must pay the lender the lesser of the loss incurred
or the insured amount.

interest
The fee charged for borrowing money.

interest accrual rate
The
percentage rate at which interest accrues on the mortgage. In most
cases, it is also the rate used to calculate the monthly payments,
although it is not used for an adjustable-rate mortgage (ARM) with
payment change limitations.

interest rate
The rate of interest in effect for the monthly payment due.

interest rate buydown plan
An
arrangement wherein the property seller (or any other party) deposits
money to an account so that it can be released each month to reduce the
mortgagor's monthly payments during the early years of a mortgage.
During the specified period, the mortgagor's effective interest rate is
"bought down" below the actual interest rate.

investment property
A property that is not occupied by the owner.

joint tenancy
A
form of co-ownership that gives each tenant equal interest and equal
rights in the property, including the right of survivorship.

judgment
A
decision made by a court of law. In judgments that require the
repayment of a debt, the court may place a lien against the debtor's
real property as collateral for the judgment's creditor.

judgment lien
A lien on the property of a debtor resulting from the decree of a court.

judicial foreclosure
A
type of foreclosure proceeding used in some states that is handled as a
civil lawsuit and conducted entirely under the auspices of a court.

late charge
The penalty a borrower must pay when a payment is made a stated number of days.

lease
A
written agreement between the property owner and a tenant that
stipulates the conditions under which the tenant may possess the real
estate for a specified period of time and rent.

leasehold estate
A
way of holding title to a property wherein the mortgagor does not
actually own the property but rather has a recorded long-term lease on
it.

lease-purchase mortgage loan
An
alternative financing option that allows low- and moderate-income home
buyers to lease a home from a nonprofit organization with an option to
buy. Each month's rent payment consists of principal, interest, taxes
and insurance (PITI) payments on the first mortgage plus an extra
amount that is earmarked for deposit to a savings account in which
money for a downpayment will accumulate.

legal description
A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.

liabilities
A
person's financial obligations. Liabilities include long-term and
short-term debt, as well as any other amounts that are owed to others.

liability insurance
Insurance
coverage that offers protection against claims alleging that a property
owner's negligence or inappropriate action resulted in bodily injury or
property damage to another party.

lien
A legal claim against a property that must be paid off when the property is sold.

line of credit
An
agreement by a commercial bank or other financial institution to extend
credit up to a certain amount for a certain time to a specified
borrower. See home equity line of credit.

liquid asset
A cash asset or an asset that is easily converted into cash.

loan
A sum of borrowed money (principal) that is generally repaid with interest.

loan commitment
See commitment letter.

loan origination
The process by which a mortgage lender brings into existence a mortgage secured by real property.

loan-to-value (LTV) percentage
The
relationship between the principal balance of the mortgage and the
appraised value (or sales price if it is lower) of the property. For
example, a $100,000 home with an $80,000 mortgage has a LTV percentage
of 80 percent.

lock-in
A written agreement
in which the lender guarantees a specified interest rate if a mortgage
goes to closing within a set period of time. The lock-in also usually
specifies the number of points to be paid at closing.

lock-in period
The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.

Strata CouncilA
homeowners' association in a large condominium or planned
unitdevelopment (PUD) project that is made up of representatives
fromassociations covering specific areas within the project. In effect,
itis a "second-level" association that handles matters affecting
theentire development, while the "first-level" associations handle
mattersaffecting their particular portions of the project.

maturity
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

maximum financing
A
mortgage amount that is within 5 percent of the highest loan-to-value
(LTV) percentage allowed for a specific product. Thus, maximum
financing on a fixed-rate mortgage would be 90 percent or higher,
because 95 percent is the maximum allowable LTV percentage for that
product.

merged credit report
A credit
report that contains information from three credit bureaus. When the
report is created, the information is compared for duplicate entries.
Any duplicates are combined to provide a summary of a your credit.

modification
The act of changing any of the terms of the mortgage.

money market account
A
savings account that provides bank depositors with many of the
advantages of a money market fund. Certain regulatory restrictions
apply to the withdrawal of funds from a money market account.

money market fund
A
mutual fund that allows individuals to participate in managed
investments in short-term debt securities, such as certificates of
deposit and Treasury bills.

monthly payment mortgage
A mortgage that requires payments to reduce the debt once a month.

mortgage
A legal document that pledges a property to the lender as security for payment of a debt.

mortgage banker
A company that originates mortgages exclusively for resale in the secondary mortgage market.

mortgage broker
An
individual or company that brings borrowers and lenders together for
the purpose of loan origination. Mortgage brokers typically require a
fee or a commission for their services.

mortgagee
The lender in a mortgage agreement.

mortgage insurance
A
contract that insures the lender against loss caused by a mortgagor's
default on a government mortgage or conventional mortgage. Mortgage
insurance can be issued by a private company or by a government agency
such as the Federal Housing Administration (FHA). Depending on the type
of mortgage insurance, the insurance may cover a percentage of or
virtually all of the mortgage loan. See private mortgage insurance
(MI).

mortgage insurance premium (MIP)
The
amount paid by a mortgagor for mortgage insurance, either to a
government agency such as CMHC or to a private mortgage insurance
company.

mortgage life insurance
A type of
term life insurance often bought by mortgagors. The amount of coverage
decreases as the principal balance declines. In the event that the
borrower dies while the policy is in force, the debt is automatically
satisfied by insurance proceeds.

mortgagor
The borrower in a mortgage agreement.

multidwelling units
Properties that provide separate housing units for more than one family, although they secure only a single mortgage.

multifamily mortgage
A residential mortgage on a dwelling that is designed to house more than four families, such as a high-rise apartment complex.

purchase and sale agreement
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

purchase money transaction
The acquisition of property through the payment of money or its equivalent.

qualifying ratios
Calculations
that are used indetermining whether a borrower can qualify for a
mortgage. They consistof two separate calculations: a housing expense
as a percent of incomeratio and total debt obligations as a percent of
income ratio.

quitclaim deed
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

radon
A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

An item of value, money,
or documents deposited with a third party to be delivered upon the
fulfillment of a condition. For example, the deposit by a borrower with
the lender of funds to pay taxes and insurance premiums when they
become due, or the deposit of funds or documents with an attorney or
escrow agent to be disbursed upon the closing of a sale of real estate.

trust account
The account in which a mortgage servicer holds the borrower’s escrow payments prior to paying property